Highlights
Despite today's outsized supply of Treasuries, coverage was solid for this morning's weekly T-bill auctions, at 2.91 the highest in 4 weeks for the 4-week and remaining high at 3.09 for the well-received 8-week bill newly introduced in mid-October. But demand from end investors was only moderate, with non-dealers taking down 45 percent of the $50 billion 4-week offering and 38 percent of the $30 billion offered in the 8-week, both slightly below their average takedowns. The awarded high discount rates continued to reflect expectations of further Fed hikes ahead, up 3.5 basis points each from last week at 2.200 percent for the 4-week and 2.240 percent for the 8-week.

Definition
Treasury bills are sold at public auctions every week. Competitive bids at these auctions determine the interest rate paid on each issue. A group of securities dealers, known as primary dealers, are authorized and obligated to submit competitive tenders at Treasury auctions. Dealers can hold the bills, resell the bills to their clients or trade them with other securities firms. Typically, the New York Fed approves about 20 securities firms to be primary dealers but that number dropped sharply during the 2008 financial crisis as some were merged into other firms or went bankrupt. The Fed has been rebuilding that number regularly and the latest list can be found here. Since these are public auctions, the Treasury must announce the size, date and time of the auction every week. Four-week bills are announced on Monday for a Tuesday auction and are issued (settled) on Thursday of the same week. If a Monday is a banking holiday, the bills are auctioned on Wednesday. (Department of the Treasury)
Why Investors Care

Data Source: Haver Analytics

The 4-week note was instituted to
replace the necessity for
sporadic cash management bills.
This weekly auction is more
predictable for investors.
Predictability in the Treasury
market is a highly rate feature
that promotes demand for these
bills. The 4-week bill rate
depicted in this chart represents
the high discount rate from the
Treasury's weekly auction on
Tuesdays. It only represents one
moment in time, and is not an
average of daily numbers. The
dates on the chart and the grid
are the auction dates of the
security, which are usually on
Tuesdays.Data Source: Haver Analytics